Market Penetration and Acquisition Strategies for Emerging Economies K - PDF document

Market Penetration and Acquisition Strategies for Emerging Economies Klaus E. Meyer Professor of Business Administration Box 218, University of Reading Business School Whiteknights, Reading, Berkshire, RG6 6AA, UK km.cees@cbs.dk Yen Thi Thu Tran PhD Student Copenhagen Business School Kilevej 14 A, 6., 2000 Frederiksberg, Denmark yttt.ivs@cbs.dk This version: 25 January, 2006 Please refer to the published version of this paper when citing: Meyer, Klaus E. & Tran, Yen Thi Thu (2006): Market Penetration and Acquisition Strategies for Emerging Economies, Long Range Planning , 39, no. 2, 177-197.Acknowledgements: We thank the Social Science Foundation (SSF) Denmark for sponsoring this research as part of the MASEE project (grant number 24-01-0152). We also draw on earlier research sponsored by the Department for International Development (UK) under DFID/ESCOR project no. R7844, Center for New and Emerging Markets, London Business School. We thank our contact persons at Carlsberg A/S and our research partners in Poland, Lithuania and Vietnam for many stimulating discussions, and Bent Pedersen (Copenhagen Business School) and Zeng YuPing (Peking University) for sharing their insights in the Chinese brewing industry. Comments by Arnold Schuh, Mike Peng, Sheila Puffer, Tina Pedersen and Peter Krag as well as conference participants at the 2 EIASM workshop on ’International Strategy and Cross-Cultural Management’ in Edinburgh University, and seminar participants at Copenhagen Business School are gratefully acknowledged. All errors remain the authors’ own responsibility. Market Penetration and Acquisition Strategies for Emerging Economies Abstract Multinational enterprises (MNEs) are expanding their global reach, carrying their products and brands to new and diverse markets in emerging economies. As they tailor their strategies to the local context, they have to create product and brand portfolios that match their competences with local needs. A multi-tier strategy with local and/or global brands may provide MNEs with the widest reach into the market and the potential for market leadership. However, it has to be supported with an appropriate combination of global and local resources. Foreign entrants thus have to develop operational capabilities for the specific context, which requires complementary resources that are typically controlled by local firms. As institutional obstacles and the structural weaknesses of local businesses often inhibit the direct acquisition of such firms, foreign investors may pursue un-conventional strategies, such as staged, multiple, indirect, or Brownfield acquisitions, to acquire local resources. We outline these strategies for penetrating local markets by acquisition of local firms, and illustrate them with the entry and growth of Carlsberg Breweries in four very different emerging economies: Poland, Lithuania, Vietnam and China. managerial decisions. In particular, we distinguish between entry modes suitable for foothold strategies, and aggressive ones aimed at market leadership. The creative designing of entry modes, rather than choosing between textbook models, allows MNEs to achieve their objectives in idiosyncratic host environments. We develop suggestions on how to manage entry in emerging economies by drawing from two research projects on FDI in emerging economies, which are based on local research and interviews at corporate headquarters (see appendix). We illustrate the adaptation of strategies to local contexts by comparing the strategies of one multinational enterprise, Carlsberg Breweries, over the past decade in four emerging economies. This longitudinal and comparative perspective within one MNE allows us to focus on the adaptation to the local contexts. The case shows the finer details of the strategy, and provides a powerful illustration of the issues and the dynamics of strategy evolution that may be overlooked in conventional, large dataset analysis. The brewing industry provides an interesting case because it has gone through a rapid concentration process over the past decade. Still, even in concentrated markets, local and international brands continue to coexist. The parallel development of multiple brands and the structural changes in the industry reflect trends seen in many other food and beverage industries. We focus on four countries that reflect the diversity of Carlsberg’s experiences. Carlsberg entered Poland with a partial acquisition in 1996, and has built a strong position using staged, multiple, and indirect acquisitions. In Lithuania, Carlsberg took over a local brewery in 1999 and acquired further local brands in a global merger in 2001, thus developing a dominant market position. In Vietnam, Carlsberg entered as early as 1993 with two JVs that serve both the mass market and the local premium market. After long perseverance both generate handsome profits. In China, Carlsberg has been a minor player in the 1990s, but it initiated in 2003 an aggressive strategy of acquisitions in Western China, aiming to capitalize on its emerging economies experience. We develop our arguments as follows. In the next section, we introduce the emerging economy context. In Section 3, we outline how consumer goods MNEs may position themselves in emerging economies. On this basis, we discuss in Section 4 how MNEs may use acquisitions and joint JVs to access the local resources needed to build their position. Section 5 presents the four case of entry by Carlsberg Breweries, which are set in context in section 6. Section 7 concludes. Many industries are highly fragmented, as many small firms compete for a share of the market. With the entry of foreign investors, the market structure may rapidly change, adding to the uncertainty of the market place. MNEs have not been deterred by such obstacles, but adapt their strategies. In the next sections, we outline how this can be done, focusing in particular on branding and the acquisition of local resources. Decision makers first need to clarify their long-term objectives, namely their aspired market position. On this basis, they can then analyse which entry mode would be most suitable to achieve their objectives. In this respect, we first discuss long-term marketing strategies before turning to initial entry mode strategies. Brand Portfolios for Emerging Economy Consumers Emerging economies pose different challenges for marketing than industrialised countries. Typically, incomes are low, labour is relatively cheap, and the customer groups are highly variable. However, Dawar and Chattopadhay show that, even under these conditions, foreign investors can profitably serve these markets by adapting their strategies to the local context. For instance, low-income groups can be served by the cost-efficient production of mass products, emphasising economies of scale and earning profits through high sales volumes. Low incomes constrain demand, but the corresponding low wages also create opportunities for people-intensive approaches to marketing. For instance, sales assistants may hand out samples or promotion materials, or support service in bars and restaurants. Distribution staff may deliver smaller but more frequent shipments to sales outlets. The variability of customer groups in terms of income and regions challenges MNEs aiming for large market shares because markets may be highly segmented. Principally, foreign entrants could choose between three types of strategy: Global branding strategy – global brand with little or no adaptation, positioned as premium brand, Local branding strategy – portfolio of local brands, positioned to serve mass markets, and Multi-tier branding strategy – portfolio of global local and brands, positioned to serve different segments of the market. 3.2. Local brands A local brand strategy allows serving markets that are in some way distinct from global markets, or that in themselves are highly fragmented. In particular, a portfolio of local brands may not generate huge sales margins, but it can build market share and lower unit costs through economies of scale and volume sales. One cent earned for each of a thousand units is as good as one dollar earned for each of ten units.Consumer goods, notably durable goods such as washing machines or motorcycles, may be adapted to the needs and purchasing power of emerging economies by reducing the variety of models and by stripping out non-essenAt the same time, product features may be adjusted to the needs of emerging markets, such as improving robustness in the presence of unreliable electricity supply and lack of a local service network. Scholars such as Dawar and Chattopadhay point out that such product adjustment may require development costs, but may reach new consumers and increase economies of scale and thus reduce production costs. Others, including London and Hart, and Prahalad go one step further and advocate the development of new products and business models in a bottom-up fashion through direct interaction with local communities, and by giving local entrepreneurs leverage to adopt products locally. A portfolio of local products and brands may be particularly suitable where incomes are low on average, or where markets are regionally segmented as a result of high transportation costs (relative to value added), attachment to local brands, the limited reach of media, and people-intensive distribution networks (as in Vietnam). Success in the mass market requires operational capabilities to support a low cost strategy. In this segment, foreign entrants would compete with local firms that produce at low costs, are familiar with intricacies of the market, well networked and used to flexibly adjust to a volatile economy and to frequent changes in rules and regulation. Entrants thus need competences and business practices in managing production and marketing under emerging economy conditions, such as strategic flexibility and networking capabilities.Such operational knowledge may be transferable between emerging economies, such that MNEs share experience across subsidiaries to develop unique capabilities for supporting local brand strategies. Firms with strong operational capabilities but without internationally-known brands may opt for this type of strategy (Exhibit 2). Insert Exhibit 2 here less concern for fast moving consumer goods, such as beer, because retail outlets and pubs usually prefer to offer a range of different brands. A multi-tier strategy has to be supported by an appropriate combination of resources. As illustrated in Exhibit 2, firms with global brands and the capability to support this brand in remote corners of the world would choose a global strategy (quadrant I). Firms with expertise in operating and upgrading production and marketing in emerging economies but without a global brand can expand by building local brands (quadrant II). A multi-tier strategy may be most attractive in terms of market reach, yet it requires the MNE to possess crucial resources for both segments (quadrant III). They need a global brand and the capability to market and deliver this brand with global quality standards, as well as operational capabilities for competing with local competitors familiar with the context and producing at low costs. On the other hand, if a firm has neither a global brand nor operational capabilities that are transferable to emerging economies (quadrant IV), the company may have little to gain by investing in emerging economies. A foreign entry would require it to develop a brand and capabilities ‘along the way’, which is a highly risky strategy. Implementation: Acquisition of Local Firms and Resources How can MNE build capabilities for operating in emerging economies, and compete on the basis of local brands? A crucial element in implementing an emerging economy strategy is the acquisition of resources that are controlled by local firms. Yet, take-overs of local firms are inhibited by idiosyncrasies of emerging economy contexts, including regulatory constraints and scarcity of potential acquisition targets. Thus, decision makers have to think creatively how to design their entry strategyThey are not limited to the traditional set of entry modes -- acquisition, Greenfield or joint venture (JV) -- as much of the academic literature implicitly assumes. Many obstacles may best be overcome by customising a mode of entry to the local context, rather than opting for a second-best mode. Entrants develop idiosyncratic forms of acquisition, such as staged, multiple, indirect and Brownfield acquisitions, as well as JVs to overcome the aforementioned obstacles in emerging economies (Exhibit 3). These allow for new variations in the key dimensions discussed in the literature, namely and access to resources.Insert Exhibit 3 approximately here Traditionally many MNEs establish a new operation jointly owned with a local firm, a JV. This provides a foothold, especially where legal constraints inhibit acquisitions, and avoids having to take responsibility for an existing local firm with major restructuring challenges. In a JV, only selected resources are transferred to the new organization, leaving the core businesses of both partners separate. However, the ownership arrangement is inherently unstable and potential conflicts between the parent companies have to be managed carefully. Marketing and growth strategies are common areas of conflict between parents of a JV. For instance they may disagree on the relative priority of local and global brands in the marketing budget. Serious conflicts often arise when a foreign investor wishes to expand and invest in building the global brand. The local partner may be unable or unwilling to contribute fresh resources for an aggressive growth strategy, but at the same time object to capital increases that would dilute the local’s equity share and influence. Thus, JVs require less commitment, but may lock the investor into a partnership that later limits growth options. Forward looking JV founders would anticipate such conflicts when drafting the JV contract, for instance by stipulating conditions under which one partner may take over the JV. Like JVs, “staged acquisitions” require limited initial investment, yet this investment goes into an existing firm. At the outset, staged acquisitions are partial acquisitions in which the foreign investor has the option to acquire full control later.The initial role of the foreign investor varies considerably depending on the contract accompanying the entry. In the case of privatization, the investor often gains managerial control, but is subject to formal and informal constraints on radical restructuring. The investor may thus obtain access to local distribution channels but only limited control over the positioning of local brands (or their possible discontinuation). The increase of the foreign investor’s equity stake may be pre-planned at the outset or be initiated in response to changes in the environment, particularly changes in FDI regulation. Partial acquisitions are potentially subject to conflicts that require compromises among shareholders. The nature of potential conflicts varies with the identity of co-owners. In contrast to JVs, they normally do not draft a contract with clearly articulated common objectives, such that conflicts are more likely. On the other hand, the buy-out of the remaining shareholders may be easier, especially if they do not have a strategic interest in the firm. product of an acquisition in a different country. In rare cases, the operation in an emerging economy is actually the strategic asset that inspired the third-country acquisition. An indirect acquisition may be a short-cut to gaining market share quickly, especially if the acquired firm has strong global and local brands. These entry modes provide innovative means to implement entry strategies, especially multi-tier strategies that depend on the combination of resources from the foreign investor and local partners. Entry modes set the stage for foreign investors’ market position, but also shape possibilities for later fine-tuning. Foothold strategies, such as staged acquisitions and joint ventures, provide flexibility by creating growth options. Aggressive strategies using full and multiple acquisitions provide flexibility through control and, thus, the ability to change the local operation. Emerging Economies Strategy: The case of Carlsberg 5.1. The Global Brewing Industry Beer is a traditional, culturally embedded product, especially in Europe. Like other food products, it is influenced by local cultures and traditions, and the regional origin of the product plays an important role in the buyer perception. Thus, customer loyalty to local tastes and brands creates barriers to entry for international brands. Moreover, beer’s short shelf life, high transport costs, as well as tariffs and national quality standards used to limit the internationalisation of the industry. These characteristics of the industry suggest that, traditionally, local brands would dominate in this industry (Exhibit 1). Even so, the industry has gone through a rapid concentration and internationalisation in recent years. Local brands still dominate in most markets worldwide, yet they are often owned and supported by multinational brewers, a ‘hidden globalisation’. 24 A few global players emerged, expanding by acquisitions and global mergers such as Ambev-Interbrew and SAB-Miller. They combine local, global and multi-tier strategies. A local brand strategy has been pursued most famously by South African Breweries (SAB), which expanded in the 1990s from their South African base to emerging economies in Africa, Asia, and Eastern Europe. Typically, they acquired local breweries and reorganized the production and marketing to make them profitable. SAB developed local brands to fit the markets, while at the same time increasing productivity by replicating its low-cost brewing techniques and rigorously applying standardized of a challenger rather than an incumbent. Central and Eastern Europe provided a natural stepping stone, given its proximity to Carlsberg’s home in Denmark. Major competitors entered the region, especially Poland, thus creating pressures to follow suit. Smaller economies, such as Lithuania, provided opportunities to build emerging market experience in relative cultural proximity. In Asia, Carlsberg has in invested since the early 1990s. The JVs in Vietnam were fairly successful, while those in China were insufficient to gain a strong market position. Thus, a new ‘Go West’ strategy was launched for China in 2003. We explore the adaptation of strategies to the diverse market structure and the institutional environment in four emerging economies (Exhibit 5). Insert Exhibit 5 and 6 here Carlsberg positioned the Carlsberg brand as a ‘locally-brewed international premium brand’ which is complemented by national premium brands: Okocim in Poland, Svyturys in Lithuania and Halida in Vietnam. Regional and niche market brands complete the product portfolios (Exhibit 6). The global premium brand ‘Carlsberg’ is supported by a global marketing strategy that includes TV commercials produced for use, with limited adaptation, in many emerging economies, and advertising at major international sport events. For example, sponsorship of Euro 2004 allowed Carlsberg to reach even pubs in Vietnam, where European football is very popular and fans stay up all night to follow the games. The price differences between market segments are large, as local brands are substantially cheaper than in Western Europe, while prices for premium brands vary less between countries. Top brands thus sell at a substantial premium. The Carlsberg brand may be priced with a premium over mainstream brands of 10% in Germany, 25% in Poland, and a multiple of that in China. Carlsberg combined many types of acquisition to build its market positions, moving from foothold entries to more aggressive strategies. Insert Exhibits 7 and 8 here 5.3. Poland The Polish brewing industry went through a rapid concentration process during the 1990s.In less then 15 years, a highly fragmented industry became dominated by three major players controlling over 80% of the market in 2004, with competitive dynamics increasingly resembling those seen in Western Europe (Exhibit 7). After consolidating the brand portfolio, Carlsberg launched a major branding initiative in May 2002 to reposition the Carlsberg brand. The market share was hence increased from 0.2% to 1.5%, and Carlsberg overtook Heineken (1.2%) as the leading international brand. Euromonitor analysts were impressed by this spectacular growth: “The sales of the Carlsberg brand increased by over 700% in 2002. This growth was the result of a good promotional campaign based on a well-balanced marketing strategy, including TV commercials which consumers liked from their launch. Introducing a new disposable 500 ml bottle also helped.” At the same time, the portfolio of regional brands was streamlined, while new brands such as Harnas were introduced to serve niche markets. The product portfolio thus served all major segments of a highly segmented industry and the sales strategy emphasized the full range of the Carlsberg products. Carlsberg boosted its market share to 14.2% in 2002 (Exhibit 7). From 2004, the integration extended beyond Polish borders, as Carlsberg affiliates in different European countries began sharing production capacity. Even though Carlsberg was a relatively late entrant into the Polish market, this multi-track strategy laid the foundation for Carlsberg to become the third largest brewer in Poland. Continuous investment, development of niche brands, and adept integration of separate operations are designed to enable Carlsberg to challenge the market leaders and to raise profitability. *** Exhibit 9 approximately here *** 5.4. Lithuania Compared to Poland, Lithuania offers a much smaller market, and in consequence less regional segmentation and fewer players in the market. In consequence, Carlsberg attained a dominant market position at a much earlier stage, and thus came in conflict with the competition authorities. Also as a consequence of the smaller market size, Carlsberg’s activities in Lithuania were earlier integrated in a supra-national operation covering all of the Baltic States. Carlsberg acquired nearly full ownership of local market leader Svyturys in 1999. Around the same time, BBH acquired two breweries: Utenus Alus and Kalnapilis. The merger with Orkla, which owned 50% of BBH, strengthened Carlsberg’s position in Russia and the Baltic States (Exhibit 9). Thus, Carlsberg expanded in Lithuania as part of a global merger that extended Carlsberg’s reach in the entire region. This indirect In 2003, Carlsberg bought out the investment fund and increased its equity to respectively 50% and 60%, while the role of the local partners in Vietnam remained unchanged. In 2005, the production capacity limits were reached, and Carlsberg considered a further expansion. A new agreement was signed with its main local competitor, Hanoi Brewery. Thus, early entry required compromises with respect to control arrangements in the local JVs, but allowed Carlsberg to build a first mover advantage and strong local brands, and to position its Carlsberg brand in the still small but growing premium segment. 5.6. China China offers a much larger market than any of the aforementioned countries, yet this market is highly fragmented regionally, especially in the brewing industry. Carlsberg first entered China through exports in 1987, but it did not commit major resources until 2003. In the early 1990’s Carlsberg undertook the first steps in brewing inside China (Exhibit 9). Huizhou Brewery in Guandong was licensed to brew the Carlsberg brand in 1991, and in 1995 Carlsberg acquired 99% of the equity of the firm. It produced a local brand, Dragon 8, and by 2006 became the main base of the Carlsberg brand for all of China. In 1998, Carlsberg opened a US$ 80 million Greenfield brewery near Shanghai to produce premium beer. However, following continued losses over several years, Carlsberg sold its equity stake to Tsingdao, a leading brewery in the North of China, at a loss. Apparently, Carlsberg overestimated the growth of the premium segment and underestimated the pace of upgrading of local brands and the marketing savvy of international competitors in that market, such as Japanese Sapporo. After the divestment, Carlsberg found itself in a relative late-comer position in the Chinese market, as the Guandong operation was strong only in the local market. In many costal areas, the brewing industry was becoming highly competitive as local breweries and global players rapidly consolidated. By the turn of the millennium, the potential for late entrants was limited. Carlsberg thus designed a new strategy that build on its experience across emerging economies. Its ‘go West’ strategy aims to establish market positions by acquiring equity stakes in the Western provinces of China. Carlsberg identified and systematically penetrated these ‘virgin territories’ of the global beer industry. In 2003-4, Carlsberg acquired equity stakes in five breweries from Kunming in Yunnnan province to Wusu in Xinjiang province, and established a JV in Qinghai province, which lacked a tier branding allows to profitably develop the mass market while creating strong positions in the growing middle-class-oriented premium market. To build a market position, foreign investors need complementary context-specific resources that can be obtained through a JV or by acquiring a local firm. The appropriate design (rather than choice) of entry mode is crucial to capture local resources without losing control over one’s own resources or being drawn into a complex enterprise transformation processes. Moreover, the entry strategy needs to allow for strategic adjustments and increases of resource commitments to adapt to environmental change. As emerging economies tend to be highly volatile, competitive advantages may accrue to those best able to adapt to changing circumstances. This flexibility can be achieved in different ways. A staged acquisition or JV provides opportunities to accelerate investment if and when market opportunities arise. More aggressive modes such as full or multiple acquisitions require more up-front resources, but provide full control over the operations, and thus the ability to flexibly change the business strategy. The Carlsberg case illustrates the innovative ways by which foreign investors arrange their acquisitions to overcome the obstacles to acquisitions in emerging economies. Carlsberg accelerated its investment from initially low or moderate commitment. The partial acquisitions (Poland) and JVs (Vietnam) provided footholds, and were making the best use of available resources and acquisition opportunities, at the time. However, shared ownership creates major challenges for knowledge transfer and deep restructuring, and for coordinating strategic changes with the local partners. In its drive to establish strong market positions, Carlsberg added substantial investments to the initial operation. The combination of different modes and flexible adjustment of the strategy facilitated access to crucial market assets, especially brand names and distribution networks. Although Carlsberg often missed the opportunity to be the first in a new market, it succeeded in establishing strong market position as number 3 in Poland, number 2 in Vietnam, and number 1 in Lithuania and some provinces of China. In transferring lessons from Carlsberg’s experience to other industries, however, readers should recall that brewing is a culturally embedded industry with high degrees of loyalty to local brands. Other consumer goods, for instance technology-driven appliances such as digital cameras or I-pods, may experience much faster global convergence as innovations in Asia diffuse to Europe in a few months. In such industries, global brands dominate while local brands have, at best, a supportive role, and required local assets need to integrate research streams on marketing and entry modes, and to analyze the interdependencies between these two aspects of entry strategy. Appendix: Research Methods This paper draws on insight gained from two major research projects on foreign direct investment in respectively Vietnam, India, Egypt and South Africa, and in Hungary, Poland and Lithuania. In the context of this research, authors based in the respective countries prepared a total of 21 case studies from 2002 to 2004. These case studies focus on foreign investors’ entry strategies and the design of entry modes. In contrast to most studies that use interviews at headquarters as the primary source, our research draws extensively on local sources, including interviews and archival data. The results of the first project have been published in the aforementioned book by Estrin and Meyer, while the latter are forthcoming in a new book on acquisitions in European emerging economies. This research led to the main conceptual developments in this paper. As part of these research projects, the case of Carlsberg was investigated in Poland, Lithuania and Vietnam. It serves here to illustrate the variation of business strategy across different contexts. Starting with the country case studies that focus on entry strategies and have been prepared by respectively T.H. Nguyen, H.V. Nguyen and C.N. Tran by M. Bak and by V. Darskuvenie (unpublished), we have conducted additional archival research and interviews at both corporate headquarters, with industry experts and with Carlsberg’s CEO in Vietnam, focusing especially on marketing. The case of China is based on interviews with industry experts as well as archival materials, including publications by Carlsberg. The presentation of the case thus combines archival data, commissioned case studies, and the authors’ own interviews. The information has been triangulated across these different sources, and the final draft of this paper has been discussed with Carlsberg executives. Exhibit 3: Acquisition and JV Strategies for Emerging Economies Description Purpose Staged acquisition Initially acquiring only an equity stake, and gradually increasing equity to 100%, possibly over several years. Continued involvement of previous owners that are unwilling to sell outright, or needed to maintain legitimacy with local stakeholders. Multiple acquisition Acquiring several independent businesses, and subsequently integrating them. Build a strong market position in a traditionally fragmented market. Indirect acquisition An acquisition outside the focal country with an affiliate in the same emerging economy. The prime objective may be outside the country. The affiliate may motivate the acquisition, but this is rare. Brownfield acquisition An acquisition in which the foreign investor subsequently invests more resources in the operation, such that it almost resembles a Greenfield project. Access to crucial local assets under control of local firms that are in many other ways not competitive. Joint venture A new company in which two or more parents share ownership. Accessing local resources without taking responsibility for an existing company. Exhibit 4: Market Penetration Strategies Foothold Strategies Aggressive market leadership strategies Examples Partial / staged acquisition Joint Venture Conventional (full) acquisition Indirect acquisition Multiple acquisition Resource commitment Initially low or moderate High Very high Control Low High High Required knowledge of local context Low Moderate High Speed of entry Low Moderate High Sources of risk Risk of being too slow, limited control over brand portfolio. Moderate degrees of all sources of risk Capital investment risk (high costs of exit) Sources of flexibility Low initial sunk costs allow choosing alternative paths of growth later, or exit. High control allows changing the organization in a top-down manner. High control allows changing the organization in a top-down manner. Sources of rigidity Lock in contracts and relationships may limit growth options Existing organizational structures may not fit the entrants business practices Combination of firms and aggressive restructuring may overcome rigidities in conventional acquisitions Exhibit 9: Timeline for Carlsberg in Lithuania, Vietnam and China Lithuania 1997 First negotiations with Svyturys, with no results 1999 Carlsberg acquires 97.6% in Svyturys, BBH acquires Utenos Alus and Kalnapilis 2001Following the Carlsberg-Orkla merger, Carlsberg sells Syvturys to its new affiliate BBH. The competition authorities intervene, Kalnapilis is sold. 2002 Svyturys and Utenos Alus are organizationally integrated with BBH operations across the Baltic states. Vietnam Ca 1990 Six turnkey projects with different breweries in Vietnam 1993 Establishment of two JV in respectively Hanoi and Hue, with financial participation of investment fund IFU 2003 Acquisition of the equity stake of IFU in both JV 2004 New JV for distribution operations, with same partner in Hanoi 2005 Collaboration agreement with local competitor Hanoi Brewery China 1991 Start of production of Carlsberg brand in Huizhou Brewery, Guandong 1995 Acquisition of Huizhou Brewery in Guandong 1998 Greenfield plant in Shanghai starts operations 2000 Sale of 75% equity stake in Shanghai plant to Tsingdao. 2003 Initiation of West-China strategy, full acquisition of Kunming Huashi Brewery and Dali Brewery 2004 Investment in Lhasa Brewery (33% equity), Lanzhou Huanghe Group (30%), Xinjian Wusu Brewery (50%) and a joint venture in Qinghai province (33%). 2005 Letter of intent for acquisition of Ningxia Xixia Brewery. Sale of remaining 25% stake in Shanghai plant. Euromoney, Alcoholic Drinks in Poland, mimeo (February 2004). H.T. Nguyen and K.E. Meyer, Managing partnerships with state-owned joint venture companies: Experiences from Vietnam, Business Strategy Review 15 (1), 39-50 (2004). K.E. Meyer and S. Estrin, eds: Acquisition Strategies in European Emerging EconomiesBasingstoke: Palgrave-MacMillan, forthcoming in 2006. T.H. Nguyen, H.V. Nguyen and C.N. Tran: Vietnamese Case Studies, in S. Estrin and K.E. Meyer (Eds.), Investment Strategies in Emerging Economies, Cheltenham: Elgar (2004). M. Bak, Carlsberg Breweries A/S in Poland: Growth through Multiple Acquisitions, in: K.E. Meyer and S. Estrin, eds. (2006): Acquisition Strategies in European Emerging EconomiesBasingstoke: Palgrave-Macmillan, forthcoming in 2006.